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tv   Washington This Week  CSPAN  December 12, 2011 2:00am-6:00am EST

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it should be their call. but listen this goes back, congressman paul and i, we decision agree from time to time, but the real issues we have in this country are people are sick of washington, d.c., they're sick of the money that they're seeing spent and the fraud and crups they're see, sick of seeing their kids' futures mortgaged because we have a washington, d.c. that is out of touch with the country. .
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>> live from drake university in des moines, iowa. once again, diane sawyer and george stephanopoulos. >> and george and i were just talking about the fact, the question we get so often is, why can't people who disagree show respect for each other, and can we all work together, even people who disagree, to move the country forward? >> in form of closing, still we just want each of you, you're running against each other. but in these last few minutes, and just think of a minute where we will not run over to commercial, tell us the one thing you've learned from
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someone else, one of your challengers, on stage. senator santorum? >> well, i'll go back you know, the comment i made earlier. i mean, when i was first running for office -- you know, newt gingrich was the guy who's tapes i've listened to as a young man trying at 30 years old, deciding to run for congress. he laid out -- a vision for conservative governance that adopted and ran with in a very, very tough congressional district outside of suburban pittsburgh, so tough that no one gave me a chance of winning it. fact, election night the wall street journal called the republican national committee to find out the name of the guy that won. and they didn't even know my name at the rnc. that's a true story. and you don't get a lot of true stories. but that's a true story. you came out of the blue as a conservative. think that's, again, the thing that distinguishes me. i've run as a conservative in a 60% democratic district and won in a 70% democratic district and won in the state of pennsylvania with almost a million more republicans than
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democrats and won. i defeated an incumbent and won again. in a year that george bush lost the election by five, i won by six. and i stuck by the conservative principles that newt outlined in in the late '80s. and it's always served me well. i've been a consistent conservative. >> governor perry? >> congressman paul got me really intrigued with the whole -- the federal reserve. and i've spent a substantial amount of time reading about and currency wars, the book by james rickards but congressman paul is the individual in the stage that got me most interested in a subject that i found to be quite interesting and at the root of a lot of the problems that we have. and i thank you for that. but the one thing that i found -- outside of these individuals on this stage is that the people of this country, the people of this country really want to get america back on track. and congressman keane, whether it's somebody like you and your idea act that we talked about the other day -- there are
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really good men and women in this country that want to get this country back headed down a track. and they understand, michele, just as you've said, that this election is about the future of this country. one of the most important elections, if not the most important election, and we got to get it right. >> over to you, governor romney. >> i always find -- the principle of leadership to be most interesting. and as i look at the people on this stage, each exhibits different qualities of leadership. and they've each exercised leadership in different ways. wh one of the about ron paul that always -- amazes me is when i come to a debate like this, the only signs i see are the ron paul people out there -- in freezing. in freezing temperatures, they're always there. he ignites an enthusiasm with a number of people. that's very exciting to watch. in choosing a president, it's the qualities of leadership that are going to make the
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difference. because our positions on issues are -- are -- are important, of course. and i happen to think i've got the right positions on issues, of course. or i wouldn't have them. but fundamentally -- we know that down the road what's going to de -- determine who is a great president or not is their qualities of leadership in getting america back on track. and i believe -- right and just as governor perry just said, this the time for real leadership because this country is going in a very dangerous direction. this a time where america has got to return to principles that will keep us the hope of the earth and the shining city on the hill. that light from that shining city has dimmed over the last three years. and i will help restore it. >> mister speaker. >> well, i want to say two people, one on the stage and one not. governor terry branstad is my role model. get out of politics for a while doing something else, be involved in health care, come back when you're clearly too old, too experienced, too tied to the past, win the governorship decisively, do a
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great job. and the other -- i just want to say two other people very briefly. rick perry got me engaged about three years ago on this whole tenth amendment in a big, serious way. and i think that he he he has helped ignite a fire that is going to change america. and rick santorum's consistency and courage on iran has been a hallmark of why, if we do survive, it will be in part because of people like rick who've had the courage to te -- tell the truth about the iranians for a long time. >> well, i have learned that you should never give up on your opposition. because if you're persistent, and you present your case, they will come your way.
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so rick, i appreciate it. rick, i appreciate it. appreciate it. you're open to the federal reserve. that's wonderful. but i work from the assumption that freedom brings people together. and if you understand freedom, it's based on tolerance and nonviolence. so if it's tolerance, it should be bringing all kinds of people together and that's following our constitution. and we shouldn't be fighting among ourselves. because we shouldn't be fighting in washington if we all take the same oath office. where does the fight come from? somebody is messing up somewhere. so i say that with persistence, i think that we can all prevail and come up with the right answers. >> well, i would agree with everything that's been said here tonight. but i would also add again, someone that i mentioned a
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little bit earlier and that was herman cain. herman cain, i think when he brought up the 999 plan, and that you can't have a debate without saying "999" in the debate, i think one thing that he showed us is the power of being very plain spoken. and also reducing something to a very simple level so people get it. and people were very excited about that plan. because they could understand what that meant. and i think that's a challenge for every one of us, 'cause a lotta times, you can end up sounding and talking like a big bureaucrat in washington. people don't want that. they don't want washington. they want outside of washington. and rightfully so. that's why i think in this race, i'm-- i'm the proven consistent conservative and i'm gonna go with win-win-win rather than 999. >> well again, we are at the end of the time agreed upon by all of you, the candidates. and we thank you so much and we thank the people of iowa, 24 days the voting begins. but likes to read the candidates are saying. >> it is simple.
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when everybody is left, i am here to say are wrong. >> do want to move back to a balanced budget? 3 believe in rewarding those who create jobs? it is that big a gap. >> washington is a mess. we need to send mitt romney to washington to fix the mess. >> read the latest comments from political reporters. it is all at campaign2012. >> don quasi-talks of a house committee about the bankruptcy. then an oversight hearing on security in iraq and afghanistan.
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>> former new jersey gov. john core design. before the house agricultural committee for questioning f global's attack. many farmers invested with the firm. they say could be as much as. he resign shortly after. this is about 2.5 hours. >> would you please stand? >> do you solemnly swear the
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testimony you are about to give for matters under consideration is the truth, the old shows and nothing but the church? >> i thank you. please be seated. >> do you know you have the right to counsel? please activate your microphone. >> i do. >> is your counsel in the room? >> would you please state his name? thank you. please begin testimony. >> like all of you, i am devastated by the enormous impact on many people's lives resulting from the events surrounding be mf global bankruptcy pales in comparison
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to the losses of farmers and ranchers and other employees the separate. it weighs up my mind every day. at the chief officer, i truly apologize to all those affected. i must make clear that since my departure on november 3 i have not had access to many of the relevant documents that are essential to my being able to testify accurately about the chaotic days. the members should also understand that the committee turned down my request to testify voluntarily now could january. i had hoped i would have reviewed relevant record so that i could be more helpful to the committee. all i intend to be responsive,
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have no personal knowledge. many of your questions may be ones i have. when i joined the company in late march, it was a brokerage that provided execution for products traded. they reported losses in five consecutive quarters before i arrived. they lost money in each of the previous three years. upon my arrival, they advised any business plan. it is communicated to the public and provided that they would evolve into a broker-dealer and
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into an investment bank. the implementation was expected to take three-five years. i was hopeful about the prospects. i invested in it. my compensation was in the form of options. i purchase shares of the company with mine own. in the summer 2010, i met several times with the senior traders to discuss ways to improve this picnic one was for them to purchase short-term european sovereign debt. before i came the firm had engaged in billions of these with regard to u.s. treasury security.
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we decided we would draw on these experiences to engage involving short-term foreign sovereign debt. i believe that the investments are prudent investments. the first three of these are rated aa or better. all three of three main a braided or better. they were backed by the
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facility and the imf. as strongly advocated this. it is important to recognize the position was the internal discussions. the trades were analyzed and debated at multiple board meetings. they all joined the board before. they are independent and sophisticated fare at the time of the bankruptcy they were with in these risk limits. the positions are also publicly disclosed both in the periodic financial statements which were reviewed and and other public
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statements including press statements and earning calls. none of the securities has defaulted or been restructured. all of those securities reach maturity of they were part. in my written statement, i have attempted to describe the relevant contacts. but did not exert undue or improper influence on regulators. my communications are in the presence of very members as well as my own colleagues. the late summer and fall of 2011 were difficult times and the financial markets. on october 17, 2011, they publish an article that
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described a dinner rolling regarding capital treatments which they had disclosed on september 1, 2011. other news stories followed. rating agencies began to cut the ratings. announced this on the 25th. they revealed that they have lost $191.6 million. in light of the attention that has been given and the report said that contribute the lost ones, it is important to note that it was not related to those positions. the lion's share of the loss was a right off of approximately $119.4 million.
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some clients with truth their business from the firm. others require increase margins. they stock traded at higher volumes and lower prices. despite our best efforts and generate liquidity, they lost confidence in the firm. on the fourth run of everyone's mind are there reports that customer accounts have not been reconciled. i was stunned when told that mf global cannot account for many hundreds of millions of dollars of clients' money. i remain deeply concerned about the frozen funds.
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i simply do not know where the money is or why they have not been reconciled today. as a chief executive officer, i had overall responsibility for the firm. nor was i an expert and complicated rules and regulations governing this. i do not know which accounts are unreconciled or which ones were even subject to the segregation rules. i do not know whether there were
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operational layers or elsewhere. and whether they have held onto funds. i am sure the bankruptcy receiver are working to answer these questions and understand what happened during the last days and hours. i tried to exercise my best judgment on behalf of my clients and shareholders. let me go back to where i started. i mean this with all sincerity. personally and on behalf of the company. that concludes my prepared memories. i am prepared to answer
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questions. >> thank you. i now recognize myself for five minutes. you have searcher before. even know we have an obligation to address uncertainties in the market. thousands of your former customers are experiencing hardship because of the events under your watch. many are the farmers and ranchers i represent in oklahoma. the fact that the proper the is missing is alarming. it is disheartening. the fact they lost confidence may have a long-term impact on practices of the agricultural community. many of our constituents, the 3000 people who used to work
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here, are watching. there of looking for answers. i suspect you may have some of the answers. i would like to ask you to enter these to the best of durability. is there a shortfall in customer funds that some of global was required to keep segregated? >> i know only what i read. it certainly was true on the late evening of the 30th of october, that there were unreconciled accounts. >> to the best of your knowledge, why is there a shortfall? >> there are many transactions that occurred in those last
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chaotic days. i am not aware of all of those. nor do i have the information to look at those transactions. as a consequence, it would be very hard for many to speculate why or where the shortfall to place. >> in your role, did you authorize the transfer of customer funds from the segregated accounts? >> i never intended to break any rules whether it dealt with the segregation rules are any other rules. >> are you aware of any transfers of funds at the customer accounts? >> i am not in a position, given the number of transactions to
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know anything specifically about the movements of any specific funds. i will repeat i certainly would never intend to direct or have sector faded funds move. >> when you made aware that these funds were missing? >> the person i heard of the hundreds of millions missing was on sunday nights. >> i would like to discuss the company that has been around for two and a 30 years fails. based upon press reports, under your direction. it increase steadily. it has been reported that the
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exposure would from 1.5 billion to 6.3 billion at the time of the bankruptcy. let me ask this. who is this? >> michael was the chief officer of the firm proceeding me and was until the end of 2010. >> explain to me what he does. >> he represents the board of directors and administrating the delegation of authority that the board a science -- the board and signs -- assigns to the firm. >> is it true that he expressed
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concerns that its mf was over exposed and that the firm did not have enough capital? >> he certainly had a different view about the southern default risk, especially in the contect that we did other business. he expressed that to the board. >> did any members of the board's concern me with the level of risk of? >> there were multiple discussions. most of which i think will be documented in the board meetings about this subject. there were people who dissented
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in the debates and that sometimes supported actions that we were taking after those debates. sometimes there were people who did dissent. i do not know the exact elements. we generally a right of a consensus. >> is it true you threaten to leave the firm if they did not trust your judgement? >> i did not threaten the board that i would leave. i have one specific conversation with the league's director which could have been interpreted that way in the sense that i said if the board using the power that it held lost confidence in me i would be willing to step down. >> i understand he is no longer
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the chief risk officer. were you involved in bad? >> my view was that we needed someone in the position that was more fully attuned to be dealers side of our business than what his background was about. there were other issues about how people worked with each other, not with me in particular but with in the firm that let the board and my agreement that we should change them. >> we have all been watching the arizona crisis unfolds. there has been uncertainty.
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you push forward with this despite warnings. what do you know that we did not? why are you so confidence to the degree you're willing to bet the survival of the firm and its employees? >> we looked at many ratings. they were certainly not the only consideration who looked at a counterparties would charge for an initial margins. you would look at how individual securities were looked at by regulatory authorities around the globe, what they were able to be used as collateral for. you would look at prices and
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markets to determine whether people thought it was being priced into it. there were many different considerations with the ongoing dialogue that clearly can be second guest. they were going to take a much more forceful steps. they would avoid bankruptcy or insolvency. they will hold to the full payment. >> in the day's sitting at a bankruptcy, how often did you talk? >> no. private conversations in my recollection or held.
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to the best of my recollection, he was on the general discussion with regulators on the early hours of october 31st. if i am not mistaken, a posting on saturday which was, there were a >> did he encourage a bankruptcy filing? >> there was no encouragement in any of those forums. i do not recall anyone suggesting that he was encouraging bankruptcy. >> as a registered merchant, mf
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global was subject to audits by accounting firms. what are generally the results of the audits over the past year? >> from my recollection -- you would have reviewed them? >> i would if there were exceptions to challenges. discussions in august that i was aware of. further discussions with the sec. there were inquiries about the treatments at different points, stock reporting of that began challenges to how the firm was operating that i can
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recall. >> but when it was made, did you make those changes? >> to my recollection of the details, there are many elements of internal o utside consultants. we had people who made sure we were responding. we went through reviews of those kinds of actions taken in repsonse to questions. >> how would you respond to charges that the books were a mess? you borate supporter of sarbanes
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oxley -- you were a supporter of sarbanes oxley. >> my understanding is that our books and records were reflecting the chaos that occurred in the last two or three days as the firm was under severe pressure and have lost the confidence of the marketplace. i think that is distinct from the books and records. i have reason to believe based on the reporting that occured that they were not in a mess. that is a question i think others will have to think about
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after they look at them. hourss clear in the last there were many, many, many more transactions than typically occur. >> why did mf global report that it didn't have any position when it began entering into transactions that entered into debt exposure? >> i believe without the ability to be certain on this, always open to confirming with records, you must be looking to
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the month end reports on our capital position. in september 2010, it is quite possible that beginning positions we took were on the books. >> my time has expired. we appreciate the indulgence. we turn to the ranking member of people like to begin. we will soon have to break. >> thank you. i just, you know, one thing in youruck me
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testimony, when you took over it was 37.5 to 1. then you got it down to 30. that's a good thing. this mentality i do not get. >> the challenge, and i listen to our earlier conversations, the challenge of running it is that it was a broker dealer. those two elements pose different constraints. does it build it up higher than would otherwise be the case? >> according to your testimony,
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the never lost any money. they never defaulted. >> the thing that the you in trouble was when they required you to put up considerably more money. >> the capital adjustments that we took are really different than the capital and liquidity issues. those were things that we had on different parts of our organization we could p uut in. not much difficulty we were able to run excess capital positions. you are suggesting that the rtm
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positions were a drag race in the beginning user of liquidity. it is true. they were cleared. on the other hand, the cause of it'sobal's stress in last few days was a combination of positions that for a concern for the market place, and make no mistake about that. it is also a ratings downgrade. it was an inability for those of us in management to convey what the losses were all about
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it was conflated with others. >> i guess we have to go long. >> the committee will stand in recess parity will be back when we return. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> we are examining the global
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bankruptcy. the committee recognizes the ranking member to continue this. >> thank you. your testimony in forms that mf global could not be held. who told a disinformation? >> to the best of my memory, i was informed to entity or 11:00
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on sunday evening. i will admit that i was in a group of people. i do not know exactly whether it was cfo or the general council or who exactly. it was stunning. someone from the firm. i talked to the chairman the next morning purities said he had been woken up. do you have any recollection? >> be careful with my remarks.
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there was a presumption. they were still working to try to reconcile the books. they cannot establish that the money was missing. there was a concern they would not be able to do that. we were in the process of due diligence. they would have this reconciliation.
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>> there is that any recollection to you? >> got any satisfactory explanation. >> there were unreconciled accounts. it does not unlike it. i really should not speculate. that was the efforts that were being put in place. >> at any point, i assume that it is not on a broker dealer. >> i've not reviewed records.
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>> there are some small injuries. i do not remember. there is no intention. >> in your testimony, you say you have a little expertise. who have that expertise? who did you rely on for that? >> every firm would put them place control elements. they would give assurance to
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ourselves into our auditors and regulators in the filings that we would make. i have confidence that people were doing that. they reviewed the various procedures. >> there is not one person? >> the ceo is responsible for all aspects. >> i understand that. >> he is responsible for the financial firm. there are people who are
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responsible for the operational aspects. there are those for the audit team. >> who had the authority to move them tax ? >> i believe it is a team of people. i do not think it rest with one single individual. there is a cfo of american and
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european operations. it should have people who handle cash management. there is someone that it's a bold and ultimately. one of the reasons you have been careful as that it is very hard to try and reconstruct from the position that i held out of would have worked. it is a complex process. >> did you have funds in sovereign foreign debt? >> to my recollection and all
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records to verify this, the answer is no. the sovereign positions were held at the broker-dealer and they were not a part of the scm process. >> i do not know a lot about this business. the profitability is in the earnings. >> i will not bore you with rehashing it. we tried to make it precise. they yield 5%. there is a payment of two% of interest.
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the difference is the probability that you will make on that. >> what i was asking is that a part of your profitabilty bigger than the commission itself? >> no. . >> are you making money on that? >> i tried to frame some of the history. they are under enormouse pressure given the legitimate competition. there is pressure on it. commissions had declined. we had not stayed up to date
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with technology so we were boys brokering more than technological delivery. probably more important is the extent it time of low interest rates are around the global bad had compromised the spread and would be able to earn. have other long-term aspects that i spoke of that were
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attracted because of the scope was a business in stres s. >> thank you. the chair now recognizes the chairmen from virginia. >> thank you. i would like to follow up with what happened to the best of your knowledge. what role did you pursing play a monitoring the segregation of funds? -- personally played in my entering the segregation of funds? >> my role would be primarily to bring the assurance to myself on an ongoing operating basis that we have. the people, the policies, in place to maintain that.
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at least until the last few chaotic days of how comfortable we were. >> how often were you shown data demonstrating the funds were intact? >> >> i was aware that we had to make those calculations daily. i did not look at them on a daily basis. >> how often did you look at them? >> i would not say that i looked at them other than the fact i was assured that they were calculated every day and submitted to the appropriate bodies. >> when did he first discovered that the accounts were missing funds? >> as i have answered, the lack of reconciliation brought to my attention with regard to many millions on sunday.
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>> what sun.? >> the 30th. >> october 30. are you aware of any instances prior to the events in which their work shortfalls' in consumer funds? shortfalls in consumer funds? >> i was not aware. >> is a possible that any such shortfall could have gone undetected by you or other senior management? >> i am not being flip. apparently -- >> has this plan on for a long time? is suddenly happened -- is this something that had gone on for a long time? it is suddenly happen? >> it was either a
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miscalculation or money that was expected to come in. >> it should be a rather large miscalculation. $1.2 billion. >> i agree. >> have customer funds at mf global ever used to fund house are proprietary accounts? >> to my account, segregated funds for futures accounts have been invested in what i would call role 125, eligible securities. they were held in depositories for the client. >> did your firm ever to invest the segregated funds in foreign sovereign debt without first the approval of a customer to make such an investment tax ?
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>> that it not occur. >> when you have a separated funds, the money is not in a vault. you put it someplace. >> it is invested in securities that are allowable under the 125 roll or it is in depositories. >> there is some question over whether securities could have included foreign sovereign debt. >> i am not wanting to claim i am the world's greatest expert here. i think that it is only available if you have foreign deposits with denominated
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currency. >> from what you have learned since he became aware of this in late october, is it your impression that money was taken from those funds to invest in foreign sovereign debt? >> i do not want to speculate. i do not have the information that would allow me to do that. as you know, i left on november 3. i had no access to books and records. all i can do is read the same reports that are in the public forum. those are confusing to me. >> the gentleman's time is expired. the chair recognizes the gentleman from its albania for five minutes. -- from pennsylvania for five
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minutes. >> they require that they file monthly fiscal reports. they must file with the older station. it must be signed by the ceo or the cfo. from reports, i assume the cfo. what i am not aware of signing it. >> he would have been signing it. >> i have no recollection. >> you stated that he wanted to voluntarily testified before this committee to give you more time to have access. it has been over a month since
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he stepped down. you have not had access to the records. what makes you think he would have done to have access? >> that is a good question. my expectation is that we will, as a get farther down, have access. we have requested the trustee of the holding company.
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s opening statement. >> thank you, mr. chaffetz and all of you for being witnesses today helping us with our job. this hearing also is a combination of a series of hearings of the subcommittee and the full committee with regard to iraq and afghanistan. we've heard from the department
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of defense, the department of state on the transition to the civilian led mission in iraq and we've heard from the commission of the wartime contract income suggested reforms to reduce waste, fraud and abuse on the contingency operations and we follow the part of the defense to find delete to discuss the investigation earlier on the production of the afghan trucking industry. these hearings continue to highlight the challenge of the taxpayer funds from waste and fraud in the operations in iraq and afghanistan. the commission of a more time conducting fund billions of dollars had been wasted by agencies that have little capacity to manage the contractors or to hold them accountable. even worse, billions of dollars more have been dedicated to projects the were poorly conceived and our unsustainably host governments. the findings are consistent with this committee is to a oversight in afghanistan. last year the subcommittee investigation had over $2 billion in the the part of defense contracting in iraq and afghanistan. this investigation found the trucking contract found the vast production in which the war
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lords, criminals and insurgents extort the contractors for the protection payments to obtain safe passage. a follow-up hearing held by the subcommittee in september showed that the department has made little progress ruling out bad actors who undermine the efforts in afghanistan. we know now many of these actors continue to serve as u.s. government contractors. in response to the findings of the billions of dollars of waste, fraud and abuse the commissioner of the wartime contract and made a number of input recommendations for congress to consider. one key recommendation of the report was the creation of the permanent inspector general for the contingency operations. as the commission stated, no entity exists with sufficient resources, experience and audit and investigative capabilities to transcend the department of functional stovepipes. taking up the recommendation of introduced legislation the chairman mentioned that would establish the special inspector general for overseas contingency operations. these efforts of the commission along with the special the inspector general for iraq
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reconstruction and special inspector general for afghanistan reconstruction have shown the critical importance of the real time oversight in our overseas operations. we need to preserve the unique abilities of these entities in a single permanent inspector general with a flexible deployable caught three of oversight specialists. i urge my colleagues to join me in this legislation to require all the legislation is designed to address future contingency operations this hearing is about oversight in iraq and afghanistan now. to that and i would like to address recent findings by the department of defense inspector general that shed light on some of the problems with one of four largest contractors and afghanistan. the report revealed that the supreme group, the prime contractor on the multibillion-dollar defense department of the system of contract in afghanistan is under investigation for hundreds of millions of dollars and overbilling. ayaan understand that there is now a criminal inquiry on the supreme groups overbilling. these obligations raise significant concerns about the defense logistics agency and their ability to properly manage the live skill contracts and
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protect taxpayer dollars from waste and fraud. they also raise concerns about the use of the noted plus contracts that is common in the contingency operations. as we speak, the defense logistics agency is preparing to award tenderly and 30 billion-dollar contract to provide food and supplies for the troops in afghanistan for five years. so i'd like to hear from our inspectors general today about what more can be done to ensure that our federal agencies are doing their job to properly manage the billions of dollars being spent in those two countries. i also like to hear from you regarding what tools you have to ensure the company's mark overbilling the federal government for the hundreds of millions of dollars do not have the opportunity to take even more taxpayer funds in the future. so i want to thank you again for being witnesses and thank you mr. chairman for having this hearing. >> thank you. members will have an additional seven days to submit steegmans for the record. the honorable gordon as the department of defense inspector general. ambassador is the department of
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state deputy inspector general. mr. michael carroll is the usaid acting and inspector general. the honorable stuart bolin is the special lens victor general for the iraqi reconstruction and mr. stephen trent is the acting special inspector general for the afghan reconstruction. pursuant to the committee will call witnesses will be sworn in before they testify. please rise and raise your right hand. >> do you solemnly swear or affirm the testimony you're about to give will be the truth >> thank you pivotal the record reflect the witness is answered in the affirmative. in order to allow proper time for discussion, we are going to ask that each member of the panel limit their verbal comments to five minutes. you're entire statement will be inserted into the record. i will now recognize the honorable mr. hadel for five minutes. >> thank you, mr. chairman, good morning. good morning, ranking member
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tierney and distinguished members of the subcommittee. thank you for the opportunity to appear before you to discuss oversight efforts and help with asia. as many of you may be where this will likely be my final testimony before congress as the inspector general to be effective december 24th, i will step down as the dod ing. in my first month alone at the dod ig i testified three times before congress. two of the three hearings dealt with critically important issues of oversight contingency operations and selfless asia. noting that the nation was engaged in the war and that we had a pressing need to strengthen oversight to protect the war fighters and the american taxpayers. i immediately and determined to make oversight the contingency operations in south west asia a number one priority. as a result, i instituted a
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number of organizational changes to the structure and focus of the dod efforts and to increase hour in theater presents which is regularly augmented by our expeditionary teams. i believe strongly that the in the theater presents is absolutely essential to conducting oversight of operation and in beijing with military and civilian leadership in a theater to ensure that our oversight is meaningful and effective. in our audit division i created the joint and southwest asia operations tractor that and the afghan security forces funding. our audits and theater provide timely and relevant oversight and the auditors now have extensive experience in conducting complex joint audit with other federal agencies. in our investigations division, the defense criminal investigative service, vcis expanded its presence in southwest asia, and today, dcis
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plays a major role in southwest asia by participating in the key task forces that tackle complex fraud cases. the dcis is already deployed worldwide and has the capability to immediately provide investigative resources to contingency operations anywhere in the world. another division of the dod ig, the office of special plans and operations has been a key contributor to providing oversight. spo has enhance our capability to provide expeditionary changed a southwest asia to conduct timely evaluations and assessments and to provide thorough out briefs to the field commanders enabling them to take immediate corrective action.
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i also appointed a special deputy inspector general for south west asia to coordinate and the conflict oversight efforts. my special deputy has worked extensively with all of the ig offices represented with me this morning. today we are an actual, flexible, no-nonsense and aggressive organization oversight organization with a capacity to deploy rapidly anywhere in the world or on short notice, and the dod ig is prepared to respond effectively and aggressively in coordination with other federal agencies and internal dod oversight offices to address any future overseas contingency operations that a rise. i would like to thank the subcommittee for the opportunity to discuss the work of the dod ig, and i look forward to answering any questions that you
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may have. thank you para >> thank you periera thank you again for your service in your long career and the secret service and the work of the defense department. we appreciate your service and wish you nothing but the best and we will now recognize the honorable mr. gaissal. >> thank you for the opportunity to testify to the of the oversight of the department programs in iraq and afghanistan since standing up its overseas offices in 2008, the office of the inspector general, a white sheet, has conducted 31 investigations and issued 21 reports related to iraq, conducted 14 investigations and issued 22 reports related to afghanistan and issued 11 reports of activities affecting the department program and transition issues in iraq and afghanistan. our efforts during fy 2011 resulted in more than $200 million in question costs and funds put to better use.
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16.6 million in investigative recoveries and 20 contractor suspensions. these results demonstrate the impact that oig has achieved in the this publishing presence in afghanistan and kabul. as a result of congressional support, oig has fulfilled its commitment to vigorously oversee the department's transition and soon will be one of the few remaining oversight entities in iraq. the challenges the department faces in the transition to the civilian licht presence in iraq or significant. dod's planned withdrawals of its troops by the end of this month requires that the departments to provide security, life support, transportation and other logistical support that of the dod presently provides an iraq. our office of inspections has issued two reports, jul come 2009 inspection of embassy baghdad and in october 2010 compliance fall will preview which addresses the embassy's transition planning efforts. in response to the csrl, the
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department appointed a washington-based ambassador in february, 2011 to manage the iraq transition process to be we also issued reviews in august of 2009 and may 2011 of the department efforts to transition to the civilian let presence in iraq. both reviews found that the transition was taking place in an operating environment that remains violent and unpredictable. the october 2009 report on the transition planning efforts recommend that in the seabeck data develop a unified transition plan and assign a senior transition coordinator in iraq establish a work force planned to timely completion of large infrastructure projects managed by the embassy determined what will to cut services and contract management personnel would be required and verifiable resources needed to meet the increased support requirements following the departure. all of these recommendations of the enclosed. the may 2011 report noted that the embassy baghdad in the
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department had still pushed planning and management mechanisms to transition to the civilian blood presence. it also mentioned that while the department had made progress in several key decisions are pending. some planning could not be final and progress was slipping in some areas. we remain concerned that some reconstruction projects were still experiencing delays and were not expected to be completed until may 2012 and the distortion the viable diplomatic mission without the support and funding would require considerable resources, making it difficult to develop detailed budget estimates. the department generally agree with and was responsive to the intent of the recommendations. looking forward, we have to 15 investigations related to iraq and nine related to afghanistan. our 2012 iraq and ken astana oversight plans include six of its plus the proposed joint audit with dod baiji of programs
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and dhaka and kabul. in baghdad we will look at the world wide protective services contracts for embassy baghdad, medical locations in iraq and the department's oversight of the task order in losel. we also proposed that we undertake a joint auditor of transition execution and iraq including implementation of the baghdad master plan. in kabul we plan to audit the task order for the embassy security force, contracts to build prisons and the task order for mazar-i-sharif. for 20 called our office of inspections as planned inspections of the office of the coordinator for counterterrorism and the office to monitor and combat the trafficking and persons. the office of what it is following up on its work in the region regarding treatment by contractors of the third country nationals and the office of investigations also are actively engaged on this issue. we will continue to provide the
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department and the converse with the copper inspector of audits and inspections and investigations of post transition activities in iraq and preparations for the planning and operations in afghanistan. mr. chairman, mr. tierney and members of the subcommittee, thank you once again for the opportunity to appear today and i am ready to answer your questions to it >> we will now recognize the inspector general let usaid. >> thank you. ranking member tierney, members of the subcommittee, i appreciate the opportunity to appear before you today to describe our work is generally and specifically in iraq and afghanistan if i could read it like to begin explaining how we are structured, uniquely structured to provide oversight. like the agency, the oig is a foreign affairs foreign service organization and more than two-thirds of the auditors and investigators are foreign service operators permanently
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assigned to usaid oig. so that worldwide availability gives us a great deal of flexibility to put people where they need to be when they need to become and in addition to that, even though we participated in the process by statute we are exempt from countries staffing level feelings, so why this has never been an issue and i don't think it ever will be, we can put people where we need to put people regardless of what the situation is on the ground with staffing in the different embassies, and again, that gives a great deal of flexibility in over the past eight years a couple of examples or opening country offices in iraq afghanistan and pakistan, doubling the size of the staff in south africa to oversee the money for aids and infectious diseases in sub-saharan africa and then opening the satellite office on a small satellite office in port-au-prince haiti
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to help the regional office in el salvador oversee the humanitarian assistance and reconstruction of the post earthquake haiti. so i think that regardless whether it is a contingency operation or just a standard agency coming u.s. aid obligation i think we uniquely situated to do that work to do the oversight work. in iraq we started the oversight in 2003 long-term and when the embassy got up and running and the mission got up and running we established an office of seven auditors and investigators so we have been there pretty much with sigr from the beginning. on the programs and iraq are sort of leveling off to the traditional country office machine operation at about $270 million we are going to reduce the size of the staff to the auditors to the investigators move the additional people over to egypt
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of the [captions copyright national cable satellite corp. 2011]
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>> thank you, we now recognize the honorable bowen. >> thank you for the opportunity to appear before you again and address our oversight work in iraq and also to take up the issue of improving oversight and contingency operations. i just returned two weeks ago from my 31st trip to iraq over the last eight years. i met my 10 investigators and auditors while we were there. we are busy still addressing significant issues regarding the substantial u.s. funds being expended in iraq. it is true the military is departing at the end of this month, our footprint is shrinking, but billions in
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taxpayer funds is being spent scomprks that money needs effective oversight for the coming years and the years thereafter. monday we appeared before the house committee on foreign affairs to address the largest spend tour plan for the state department, and that's the billion dollars for the police development program. real questions raised about the preparation for that. much work remains to be done to ensure that it can succeed. while i was in iraq, i met with ambassador jeffrey, ambassador of iraq, who are in charge of the program and they concurred with our findings and are taking actions vigorously to implement them, however, i remained concerned about a couple matters regarding our presence there. one is a review process that the state department has implemented and that is to vet the reports we normally get back through offices here in washington, which will impede our response
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in this. you have come to rely on the reports for a quick truth on what's going on in iraq, and we want to maintain that capacity. we hope we can overcome that limitation. there has also been an investigation problem that i identify in my statement that's relative to our capacity to get information and carry on investigations. these raise concerns about our capacity to execute effective oversight in iraq. i also want to address the government's capacity to execute effective oversight in contingency operations. the war-time commission in its final report a few months ago, rightly recognized that the united states can improve its ability to oversee contingency operations recommending the creation of a special inspector general's office. in other words, permanizing what we have been doing and what our staff has been doing. i concur with their recommendation because it will
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provide savings of money in iraq. provide funds,ings of money in iraq. that's the bottom line. in iraq, afghanistan, the contingencies going forward. the specialist victor general for the overseas contingency would save taxpayer dollars. we've done that in iraq. it's being done in afghanistan. would be done in the future contingency operations. but we take very quickly the three objections to it that have been raised. one, it would be a layer of additional oversight. the opposite is true. the experience of sigr in iraq has been that we have coalesced and focused oversight of the iraq reconstruction mission, and as a result of generated more effective work, more output, work that would have been more difficult to accomplish there had been three, four, five inspector general's office is operating, and we triet the iraq inspector general counsel and as was pointed out we worked very closely from the beginning and
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with the states and with the dod over time through the process to generate better work. it has been a effective catalyst to sinner jul is oversight efforts in country, not the layer. .. finally, and this is the most important thing, would the expenses or the costs of this inspector general be more or less than the current system that is used? the answer is "less." we submitted a budget. it could operate on an effective, very limited amount for the time necessary until
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contingencies occurred, and then would be directed by the congress at the congress' call to oversight to provide oversight in contingencies as they arrive. it would be a tool for the congress, a boon to the taxpayers, and save money in these times of $15 trillion debt. >> thank you. >> i know as much as a discussion about this proposal as well. i now recognize mr. trent, inspector general in afghanistan reconstruction. you're recognized for five minutes. >> thank you, mr. chair. ranking member tierney and members of the committee. i'm pleased to be here with my colleagues to discuss ways to strengthen oversight of reconstruction in afghanistan. the president has requested more than $18 billion neophyte 20 total budget to assist
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afghanistan. repurpose will bring appropriations to $90 billion, the largest rebuilding effort since the marshall. congress started 72. the 10 auditors and investigators about a positive positive impact on reconstruction effort. it issued 49 odder reports and make what hundred 49 recommendations that have led to greater accountability contract or management. just to see her auditors had identified $70 million in funds that should be returned to u.s. government. investigators think an important role does detect and deterring fraud. the work has resulted in the recent successful prosecution of the largest to date from afghanistan. they say they produce $51 million in fines, penalties cost for features, features and savings. however, i believe sigar must do more to strengthen oversight of this critical transition period. we take aggressive steps on the
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most critical areas of the reconstruction effort. we have developed a fiscal year 2012 out of plan that identifies five critical areas to successful afghanistan reconstruction. their private security contractors come afghan governance capacity sustainability, contract to become a program results and evaluations, fraud detection and litigation. we've also added a section is to provide timely assessments of infrastructure projects. these rapid reviews will verify that the work was performed correctly and achieve the intended outcomes. most importantly this work can help determine the projects are sustainable. we are also adding a series of audits to examine contract expenditures. these audits will allow to accurately assess whether u.s. government has been billed properly. along with sister oversight agencies be consistently courteney to avoid duplicating each other's work. however we know we need a more comprehensive and targeted
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approach. therefore, along with our colleagues here at developing a strategic framework to guide the ig communities work in afghanistan reconstruction and intend to identify issues most important to lawmakers and policymakers in the same issues to drive results of the i.t. community to work. sigar hosted the first meaning of this effort last week. finally, sigar takes a leadership leadership role in holding contract is accountable in afghanistan. for expanding investigative presence in afghanistan to build criminal cases. we have 111 criminal investigations, 68 of procurement fraud. criminal and civil legal proceedings however can take substantial periods of time so sigar has enhanced his suspension program to address the need for more timely and targeted action. sigar is currently on track to make approximately 80 suspension department referrals by the end of this year.
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sigar takes important steps to enhance oversight. implementing agencies also have a responsibility to strengthen oversight of their own operations. during a recent trip to afghanistan and met with high-level u.s. civilian and military officials to discuss what steps they take to improve contractor program management. a continued to engage in important discussions is also hoped to better target set to sort. let me conclude by saying we've listen closely to the committee's questions about oversight and we are heeding your concerns. the congress has provided enormous resources for afghanistan reconstruction in a difficult budgetary requirements and a set to ensure oversight not only protects the investment that helps u.s. implementing agencies produce better results. thank you, mr. chair. >> thank you for your service. i'll recognize myself for five minutes. mr. heddell, let me start with you. the defense contracting agency
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is a little bit outside of our lane, but i'd appreciate if you'd offer to wartime contracting and indicated they were praying 56,000 -- 56,000 contracts behind in terms of auditing these contracts. why is it? how is that the dod can be so far behind in this? >> mr. chairman, my office is actually done a lot of work with respect to dcaa. i would just say chocolate for stuff that i think they probably are underresourced and need help in that respect. but historically, dcaa has been a very challenged organization. they do a tremendous amount of work for a lot of agencies. not just inside the department of defense, but outside the department of defense.
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in the last three to four years the dcaa has undergone some sweeping changes as a result of some fairly significant criticisms of their leadership, the processes and not meeting next patience. as a result of that, he has new leadership today with pat fitzgerald who is the director of the army audit and taken on a gigantic job and with the work my office has done to try and help them identify vulnerabilities and their management, in their processes and how to be an affect your organization. for the last two years their focus has been, and mrs. gordon heddell talking, more internal than external. so under ideal circumstances, they would've been focusing outward turning great work, doing lots of audits that very experienced and good leadership.
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they've had to focus inward to correct management decisions pleasing vulnerability. that's partially a result of this backlog and nodded. >> and my understanding is they been participating and spending a lot of money and resources. if that expenditure gone up, help me understand what's happening with the actual auditors themselves because you have been appropriated my money. >> absolutely. i've been a fortune organization and in the last three to four years, the dod office of inspector general has flushed up $787 million, mr. chairman. i doubt that any other ig can say that. congress has been very supportive of me. and for that matter, so has the department of defense. >> have you been spending my money?
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>> know, the problem there is that the budget -- the $87 million that i have received have not been annualized. and what that means is although i'm very fortunate to get these, i'm not able to use that money to hire permanent staff. so i can hire contract juries. i can do other things without money, but because it has not been annualized by the department, i cannot run the risk of hiring people and then having to risk them the following year for fear that i don't have enough money in my budget to pay them. >> out that $87 million in cotton, how much did you actually spend? >> well, we've spent almost all of it. >> but you hire outside contractors -- >> yes, sir. we hire outside contractors and
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creatively doing work that is positive and meets the needs of both the congress and the department of the american people. but for instance, in the early 2000, there's two things that have been that have come to haunt us today. one is what we spent our military forces into southwest asia to fight two wars, there is a mistaken belief by many of the civilian agencies that they could fight those two wars in the continental united states. my own organization being one of them. it wasn't until three or four years ago that we came to realization you cannot do that. he must be present and you have to have the people in place. you have to have the footprint. the second thing that happened is that the department of defense budget doubled to about $650 billion. and at the same time the
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contract acquisition and contract management work for is in fact was reduced in size, meaning that we lack thousands and thousands of needy contracting specialist that are not there to oversight these contracts, better not dare to raise their hand and say stop the assembly line. we are spending money that we are not watching. we are not surveilling it. those are two major issues. >> well, thank you. i think this highlights a multibillion dollars challenge and problems that we certainly need to address can fix because there's a definite need pervasive in congress, both have senate to make sure these functions are in place. with the monies appropriated is obvious he falling short of feeling. i've overstayed my time. we know recognize the ranking member, mr. tierney from massachusetts for five minutes. >> thank you, mr. chair.
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mr. chaffetz, i think we hollowed out collaboration seems in keeping at least the personnel on board and to manage contracts every time we have a hearing on that respect. if we contract outcome which is not always a good idea, then at least we have to keep on board enough people to manage these things for everybody's benefit. in your report, mr. chaffetz, the sub prime contract for afghanistan used on while those are provided the projects required by the contract to defend statistics agency failed to provide contract costs performance. specifically you found the agency overpaid the vendor a hundred million dollars in transportation costs, pick another $455 million to jewish pressures vegetables without equipping core requirements and allowed to build over $50 million in costs would erode the perp reaching here. what recourse do you have this
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inspector general in the agency fails to properly manage a contract that leads to hundreds of millions of dollars in losses to taxpayer. >> well, thank you congressman tierney. obviously this is an example of just about how bad it can get. and clearly this happened. this contract was created in 2005. it wasn't a well-designed, well thought out contract. what probably like many contracts during that period, consequently we spent some $3 billion on this contract. nics that, we overpaid the prime vendor in 90 days -- $98 million in transportation costs. we overpaid and 25.9 million travel cost of corrugated boxes and so on. and as you indicated, $455 million in services to air
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lift fruit and vegetables from the united arab emirates into afghanistan without including not in the contract. all of that is a result of not cleaning properly and using our contract, designer contract does not in the best interest of the american people. now my organization has gone to the defend statistics agency and we told them i want that money back. and the defense logistics agency agrees with us. beginning in october they began this past october of 11, they began to make efforts to determine first about what are the fair and reasonable prices that should have been charged? imagine a contract created in 2005 and now and december of 2011, we are just now determining what should've been the reasonable and fair prices to pay.
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okay, david greig, mr. ranking member to do that and they are currently in face-to-face negotiations with supreme and the timeline projections for a resolution on this and i would never hold my breath and get it all back. at a resolution for this is actually scheduled for december 9 this week. so i am hopeful that when we talk again, that i can say to you we've been able to recover a great deal of these funds. >> you recall that from a contracts that we look that make tracking situation in afghanistan. the lack of vision or ability to look at a contracts, subcontract some tiny detail of those who just never written in to begin with. so mr. bowen, and a special inspector general to help alleviate this problem is sending people in and getting partway down the road before you see these mistakes are
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happening? >> one, there will be focus and preparation in place at the time the agency begins to deploy. there'll be a commitment to deployment. as my friend mr. chaffetz pointed out, with the other ig is in moving forward and be in. >> one of the licenses you have to be there to do the work. a special inspector general thought this would be hiring people who know when they sang on, though: deploy and carry a oversight in the conflicts on. finally this is a good example of how it could make a difference. something unique to a special ig that institutional toe house. that means i can dig into problems like this and find out if it's dod money being wasted or aid money, however that money may be going away we can get to adding it to a faster and thus
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save it. >> thank you, mr. chair. >> i will recognize myself for five minutes. mr. trance, the obama administration increased rent assistance to the afghan government from approximately $665 million in fy 09 to roughly $2 billion in fy 10. this program is designed to provide u.s. taxpayer money quickly to the karzai government for purpose of carrying out reconstruction projects. is it logical to assume one of the most current governors will have proper stewardship of u.s. taxpayer money? [booing] it's a very good question, congressman. sigar has conducted a number of audits and has a number of candidates planned. a rtf in the past. looking on among other things
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than those capacity of the afghan government to administer afghan direct funds. we have a significant and serious challenge in the karzai government in afghanistan. the efforts with corruption in afghanistan are almost insurmountable. clearly we need more of a concerted well by the government there and we need a much stronger and robust criminal justice which they simply don't have. so we do it we can to monitor those funds and will continue to do that. i can't say if i'm optimistic or not with regard to the corruption and control of those funds. >> what should we be doing? if you're not confident -- i'm not confident either. what should we be doing? you said something that we need a more robust criminal system. well, they all have one.
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it are not proper procedures are proper oversight people. so what should we be doing? >> well, were doing about all we can. we need to continue with the rule of law efforts there. we can't give up on that, notwithstanding the corruption laws that we've encountered with that. we have to continue to bring pressure wherever possible on the government itself to show a concerted effort in the area and prosecute and continue to conduct audits and continue to work on the investigative side with the afghan authorities we can work with to pursue ascii or my others. >> mr. bhavan, right now the police development program for iraq going forward and there's some evidence that iraqis don't even want this program. the view your stats to ask iraqi
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police force if they need the program at the obama administration plan to spend the development program click >> yes, we reported that in our last quarterly no damned the senior official said quote, she didn't see any real benefit from the police development program, unquote. i addressed that with him bananas in iraq a couple weeks ago and asked him, did you mean what you said? his response was we welcome any support that the american government would provide us. however my statement as quoted in your recent quarterly are still posted on the website. >> so why is the administration spending $5 million year to provide his program. >> there is a belief that security continues to be a challenging issue and iraq -- a
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well-founded belief given the events of this week. killings of pilgrims again on the way to the eve of posture. the focus on trying to address those problems has been a widely scattered, high-level training program involving 150 police trainers who as we see again this week will have a very difficult time moving about the country. >> so what other problems have been found if any? >> several. he pointed out in our audit that found in the congress requires from iraq by law, that is a contribution of 50% to such programs has not been secured. that's a great concern, especially for a ministry that has a budget for over 6 billion. a government that just approved
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$100 billion budget for next year. it's not afghanistan. this is a country that has significant wealth, should be all to contribute, that has not been forced to do so in a program is crucial as this. >> i know i've run out of time, that mr. geisel d.o. comments on this? >> well, first of all i am not going to second-guess my friend and colleague on by his people found. and of course the people you need to bring up here are the people from the state department to comment on what he found. i saw that the department published a document, a 21 page document that includes goals and measures of performance for the police development program. but if my friends baby, not nine. thematic thank you very much.
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i look at five-minute now to mr. welch from vermont. >> thank you very much, mr. labrador. i want to thank each and everyone of you for the terrific work you're doing. a lot of situations here in covering reflect the impossible expectations oftentimes congress has and if it were as easy as writing a check and having police force in iraq and afghanistan be established could be no problem. against her better judgment sometimes we spend money and surprise surprise can you tell us a lot of it is being wasted. i really do applaud the work that you're doing. i am going to be introducing legislation that does stricker disbarment proceedings for contractors convicted of violating provisions of the foreign corrupt practices act. there is some debate between my office and the attorney general's office as to how
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strict that should be. that is a very critical troll for you. my view is that the department of authority hasn't been adequately exercised in a war zone. i may ask you, inspector general trend. i know that sigar has her best suspension and disbarment programs, did you believe it dod usaid are adequately and appropriately using the authority within iraq and afghanistan? if not, what are the barriers to its use its use and how cool it worked for them to ensure that taxpayer dollars are not getting ripped off? >> congressmen, we do have aggressive and somewhat effective suspension department program in sigar. and i am somewhat aware of your pending legislation on me at cpa issue. with to my colleagues at these suspension departments, it has
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been a tool available to contract authorities acquisition authorities and inspector generals as far as proposals for some time. in my experiences in the last several years in the southwest asia i felt that we could increase that use and when i came to sigar i took steps to do that. >> so it is an effective tool and should be used? >> congressmen, i believe it's a very effective tool and in the afghanistan case it is a tool in terms of corruption and contract management and implementation. >> let me ask you one more question. i just got back from afghanistan. one of the people we've met with was found the attorney general's office and the anticorruption unit. and they repair training afghan civil servants about how to detect corruption.
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when i asked the attorney general has a coin, he said we had to in the program. he says because we're teaching them how to detect it they were using information to do it. [laughter] so that is a real challenge that we face. but when we visited the commanders sent home and in kandahar, one of the things they were promoting was the developments quick chat key dam which costs about $475 million in benefits are obviously implemented. a provide electricity, maybe some irrigation. but the question is it's not coming out of their budget. it would be a supplemental expenditure. it's not like the military would take it out of their ability to do their job. so they look a bit skeptical because it's easy to prevent the expenditure of somebody else's money. bottom line, that is the conflict zone and significant questions about whether this
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could be done. my question to you is does it make sense at this point to as the taxpayers to spend $475 million on hydroelectric project that would have extensive transmission lines? olivet could be easily attachable by insurgents who doesn't make sense to put that on hold? >> congressmen, sigar does not look at the college at usaid has done work in that area. we have what god couple of power plants and energy sec or with audits, but specifically we have that. i believe my friend at usaid has done it to market my area. >> yes, sir. i'm running on the edge of time, but with the indulgence of the chairman. >> i think you're initially asked a political or
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administration question about the utility of going forward with the program. would you consider the difficult environment in which it would be implemented. we have done a couple audits and in talking to ambassador crocker this week, it seems to be a priority at the embassy and government to move forward with that. it looks like the army corps of engineers is going to undertake a major part of the program and ait would also be responsible for doing work that ticky-tacky pm. so primarily, the problem up there has been security and now it's getting difficult to get contract are on the work when you consider the security situation that they are. so overall is the power sector and important sector? absolutely. but it's a very difficult environment to work in up there.
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>> wanaque five minutes to mr. yarmouth. >> thank you, mr. chair. i thank you offer testimony and appreciate the work you do also. we now face because of the debt ceiling deal that we did a possible sequester funds and large amount of that sequester funds in 2013 would come from defense department. secretary pineda has said the such a cut is project that under the sequester process would be devastating to the defense department and our security. and yet we listened to these stories can we talk about essentially the inability to get a handle on it -- on these contracts in real time. how are we going to know,
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mr. heddell, if the sequester is really going to have an impact on defense when we don't have a grasp on the hundreds of millions and billions of dollars for spending no? >> although i can't comment on the sequester congressman yarmouth, i can tell you in the last three or four beers i has seen significant progress in inspector general community in terms of its oversight. and i love the same progress with respect to the way the commanders -- in fact they just got back from afghanistan myself. and i've seen progress in terms of the approach that we're taking. for instance, this year one of the things that we've started doing was assisting the mod and
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the emboli, ministers of defense and interior with respect to core capabilities, meaning ability to manage government, something we had not done before so that we have a way of teaching them how to do it and then going back and making sure that they are accountable. and so we are creating systems and processes. i can't assure you that is going to work, but it's something we should have done before. the other thing, the inspector general community itself, which is a significant tool in overcoming so many challenges, four years ago the statement that if you've seen one ig, you've seen one night she was really true. today it is not true. once the amendment to the inspector general act was passed a few years ago, what has happened is similar to what is happening live enforcement. all of the big things in our tenant task force says.
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they are done in teams. where you have ig is now getting together to solve a common problem. you have one person agencies working on task forces to address corruption. and by the way, you mentioned -- or it was mentioned earlier that the use of tool such as department -- while that's a great tool, but you have to realize that what happens when we do bari company in afghanistan, what happens is they just go back and change their name and reapply and get a new contract. that happens over and over again. so the answer is simply department. and obviously the thought almost no success in prosecuting companies in the prosecuting attorney in afghanistan. so we have to find ways to influence the leadership to do the right thing. i think what the oversight community we've done it. i can't comment on what the
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sequester enough funds might amount to. the department is working hard -- >> them are interested in the overall process. obviously this is broader than just iraq and afghanistan, but one of the things that has occurred to me recently as we have a world that is moving at 80 miles an hour and we have a government that is structured to rent 30 miles an hour. it's taken this long in iraq and afghanistan to get a pm on this. seems to me we have a fundamental structural problem that we don't know how to keep up with the situations we find ourselves. we're habitually late. i said that earlier in my testimony. when we had four military services fighting in southwest asia in 01 and 03, civilian agencies are finding that were back here in the continental united states. it took us until 2,742,000 make
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you realize you cannot successfully fight a war unless everyone's involved. it's taken us three or four years to get there, but i think were getting much closer to getting where we need to be. >> thank you. i don't have an answer to the problem. thank you fair match. >> thank you, mr. chair. i'm going to give myself not five minutes and follow-up on most questions. one of the things that's most frustrating to me as a freshman year in congress is that there are some things that both sides agree on that we need to be working on and you're not doing it. i look at the oversight committee. i don't think there's a lot of difference. or maybe some small differences between the two sides, but it seems like we can identify things at the $500 billion was spent on iraq police force that they don't even want. we should be finding things in common that we could be saving
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on. if we could put on -- add transparency here in president obama, i'm not using this to embarrass anybody, the president obama has sat on his website that he's committed to making his administration the most open and transparent in history. he wants a window for all americans into the business of the government and that's something i want. i actually agree with him on this issue. but yet, this panelists representing ig office principle in iraq and afghanistan. as of january for the next year, for the hypothesis will not have an ig. i am concerned about that. i want everybody to comment. you know whether the president has nominated anyone to fill these vacancies? if so, who has been nominated? have you made any recommendations and do you think the absence of permanent ig's will actually harm our efforts
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in oversight and anyone can take this question. >> i certainly like to comment. number one, i don't no the names of anyone that might have been nominated or who is being considered to be nominated. number two, i can tell you the nomination and confirmation process that we have is cumbersome and slow and it has an adverse impact on the leadership of these organizations. number three, when i took over as an act in inspector general in july 2008, the dod ig at the top had been vacant for so many years over the past 10, 12 years come you can't imagine hearing so to run organization using imap team inspect or general as a leader is for harding, you can do it for a few months, but she cannot succeed over years and
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decades. and that is what is happening. >> does anyone know why that has happened? is there any reason why this seems like both sides would agree that we need a robust ig in all these agencies. does anyone have comments on that? mr. carroll. >> i can't comment on what the white house is doing. i went to assure you that i'm a usaid, one of the great things was that was truly a partnership between him and i criticize energy into the acting role, other than the fact that the workload issue for me, the workers on in the leadership philosophy continues. i just want to ensure the subcommittee that there'll be no degradation in our effectiveness or what our work is going to be for as long as it takes for the president to make a decision.
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>> i know that mr. bowen has been a staunch advocate of sunoco. is that something the rest of the panel agrees is necessary? if you don't think it's necessary, why? mr. geisel. >> why didn't volunteer, but i'll be happy to tell you what i think. >> you look so willing to answer this question. >> i think in this testimony, the written testimony especially my colleagues made some very good points. one of the key point is that the concept is sigar and his own office has had a wonderful advantage or not is that they have hiring authorities and they have generous funding that the statutory ig didn't have. another way to approach that issue is to give us the
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statutory ig's those same authorities and robust funding. now i can't complain about funding because since i came to the department in 2008, congress has tossed us out marvelously. at those hiring authorities would make a real difference. and i agree with what he said this authorities are crucial to doing the kind of job you like us to do. >> what concerns me about the idea is that something we do here in washington all the time, something isn't working. what we end up doing is creating a whole new agency or department instead of giving authority to the people already in charge of giving them the responsibility. it seems like we do it agencies. what we create is another layer is responsibility. i just find a way to use the
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existing authorities that are trying to create a reach. but i do understand his concern and i think we all share the can and that we should be saving taxpayer money for the american people and there's ways we can agree to do it and we just need to get it done. anyway, i now recognize the ranking member mr. tierney. >> your timing is perfect. let's explore this a bit. it's a healthy debate and i appreciate iran's position on this. the special inspector general for contingency operations would not be duplicative if it's carried out in the way the legislation is drafted in the way it's intended. currently there's nobody responsible for the operations on a specially appointed on a case-by-case situation when it arises in the congress decides to implement. all of the existing inspector general said a handful of doing what they're doing within respective agencies. so if you are mr. heddell coming
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in the present moment with nothing to do. i mean, their hands are full doing things within the area of failing on my and i suspect it could be busy for as long as they want to keep that position. so let's allow you to do some testimony on that. the sunoco concept would be different in what ways? would be non-duplicative in what ways? you mention your first testimony let's reiterate because i think it's healthy to know this. >> yes, mr. tierney, first and foremost, it would be cross jurisdictional. as hard as the congress might try as much as my friend and fellow ig would play, they have to stay within their stovepipe to do their oversight, which means each of them have to be present. as my friend gordon heddell
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noted. as we've learned in iraq and see in afghanistan, programs much money. when they manage money, you'll ultimately have different ig is attacking it or perhaps no one addressing it because of the merger. pseudocode allowed to cross jurisdictional power. could be the primary mission to carry out this oversight. we know that in 2003 we would have averted the wasted billions of dollars. we know that had said to exist in a 2002 would have averted the wasted billions of dollars because the aggressive presence of audit on the ground that would've been there. third, you would have a staff that when they sign-up, they sign-up to go to conflict. that is not something my friends and colleagues can require of their staff now. they can say you're going to orszag to do oversight. that is a problem in 2005, 2006,
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2007, getting people to volunteer. still is. afghanistan is today. and finally as i said in my testimony, this would save money. that's the watch for this area. this is the oversight and government reform committee. the latter rubric should be applied when it can be applied in a money-saving way. sunoco would be one of those ways. >> manchester by my colleagues that all these different nagy is that the respective agencies and departments are busy all the time. so you have a contingency operation to ramp up and try to do other things you're doing consuming all of your time and going over to other areas. you're actually focusing another inspector general on a much-needed area to do that work on me constantly available to achieve it and get it done. i think that's a constructive part of that. there's other issues you raise,
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but i tank that you can use the sustainability of products that my colleagues raised earlier, the whole wartime contracting commission, which incidentally we had to get over there because of the issues and contingency contract and get the imac to look way things were dredged out in the beginning. their final chapter sums up the whole issue of tragic sustainability by saying the commission sees no reason they are making adequate plans to ensure that those nations will deal to operate and maintain u.s. funded projects on their own. nor are they taking sustainability risk into account. just for the panel, to refinance still to be the case for other things being meant to include sustainability risk in their projects as they move forward and particularly in iraq is in the thought of that area in afghanistan and elsewhere? whoever might want to volunteer.
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>> as far as oversight of that question in every one of our performance audit in iraq and afghanistan, we've been audit objective for sustainability. to be honest what we found to date is that it is sort of a mixed bag. i wouldn't say it's a very successful picture historically or even moving forward. but i think realistically to answer the question, yes, the agency is helping sustainability in the design of their projects, but you're dealing with the afghan government particularly going forward here and that's going to be problematic. we've been finding problems for sustainability and programs in afghanistan. >> the problem we have with the kabul power plant, where you do decide to spend $300 billion of taxpayer money and then decided that they could get electricity
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cheaper on that basis, to a know why that happened or what we missed i'm not? >> well, i am not sure exactly why the embassy and aad decided to build the project way they did with diesel fuel that could or could not be shipped in and then decided to move in a different direction. the way it's described now is that the kabul power plant is that a fallback and a surge capacity with the larger infrastructure that they are putting forward. so i would say from sustainability pointing out that maybe with a well thought out, but i think you've learned since that time. >> i think i would be constructive if you note the areas and attend something that won't be happening again. at the church to you if you would. i guess you're not prepared to answer today. you can go back and find out what happened and this is about now a backup plan, something might add as an excuse.
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i think everybody novus on that. and now they're going to find some region, but we need to ask you to go back and find that while iraq and put in place a plan to make sure it doesn't happen again. >> thank you. i now recognize mr. welch. two of the recurring questions about the expenditure of these monies is whether we have a reliable partner and whether security on the ground is adequate so that the work can actually be done. both of those are huge impediments. and i am just going to -- a constant conflict to some extent with policy object is, where let's say in afghanistan as desire to build a civil society. mr. carroll commuter departed there so much of the responsibility for implementation of some of these
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projects. it's a predicate question that should be asked and answered by some authority whether a project has a reliable partner such that there can be a reasonable degree of conference to be implemented. i'm thinking very much about -- pardon me, the iraqi police training. or is there a security situation so the work can be done? that might be relevant to something like the dam project. if you like either or both of those, does it make any sense under any circumstances to do a mary pass on a major expenditure , hoping meadow have been just because we'd like it to have been. >> well, aad -- you are right. they are the meat and potatoes of civil society. his education and service programs. they do reconstruction in iraq
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and they've done it to an extent in afghanistan. and i think it would be news if i were to say it was difficult to do development in the middle of a war insert after problematic through mr. bowen is on that thread afghanistan. you ask about reliable partners. aid historically has implemented their programs through nongovernmental organizations primarily. a lot of those are u.s.-based. some international, multinational agencies and that sort of thing. so they are reliable partners. it is now moving in a direction towards funding more development assistance through afghan ministries and they have a process in place to do some capacity assessment of the systems in place and the
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ministry's ability to do the work. as they convince themselves or as the data presented south comment they move forward or not on their programs. the website for the traditional aid programs, civil society, democracy and governments, health education, that sort of thing. there are reliable partners. there is a willingness on behalf of the afghan people to make these things happen. >> i'm going to interrupt you right there. that is a meaningless statement. the afghan people. who are they? you know what i mean? in a general sense, the afghan people is desirous to have good things happen as we are. but there's not a structure. there's not a political implementation program. there's not sufficient security. you know, i've met contractors who are confined to basically
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the embassy compound. how do you manage your program? it would be like mr. bell and boe about iraq and afghanistan, mr. trent in afghanistan from capitol hill. i mean, it just doesn't work. you know, this is an enormous frustration are you, but i think there's an illusion and congress is the one primarily responsible because we will have the money go out under circumstances where there is no part goal possibility it will be well used and then we'll get angry at you when you report to us that hey, a lot of money went missing. so there is a predicate question here. we probably should be asking it. i'm wondering whether the organization might have to certify that for this project we have reliable governmental people or we've got sufficient security that can be done. >> already.
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i yield back. >> thank you very much. i want to thank the panelists are being here and taking time for the work you're doing. have a great mr. chairman. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> live at 7:00 a.m., your calls
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